How Do You Like My New 'Doo

nedsaid · Post by **nedsaid** » Fri Jul 31, 2015 9:51 pm

My small/value tilted portfolio just lately became untilted. My Small-Value portion got to be 9% of my stocks, 3% of that was an individual stock. This stock is an Insurance Company headquartered in the metro area where I live. A Japanese firm announced the purchase of this company last Friday and the stock went up 50% in a day.

On Monday, I sold the stock. I had owned it for 16 years, I bought it soon after the company de-mutualized and became a publicly held company. I made 8-9 times my original investment on the stock. I split the proceeds four ways: two financial stocks, the Vanguard Small-Value ETF, and the Vanguard Total Bond Market ETF.

This shows the rewards of owning individual stocks but I have also posted about the risks.

Here is the Portfolio X-Ray of my retirement portfolio.

Edit: The image of my original stylebox disappeared when tiny-pic, a service that hosted images, went out of business. So I copied the information from a post below in October 2015, three months later. Not too much changed in a few months.

Stock Stylebox
22 22 18
06 07 10
06 06 04

US Stocks 50%
Foreign Stocks 17%
Bonds 29%
Cash 3%
Other 1%.

Individual stocks were about 12.5% of the portfolio as of my original post.

Now here are my top 10 holdings:

US Total Stock Market Index 13.5%
Diversified Bond Fund 6.05%
Cash Balance Retirement Pension 5.02%
Vanguard US Total Bond Market Index 4.47% In Fund and in ETF form.
GNMA Fund 3.62%
TIPS Fund 3.19%
Vanguard Small Value Index ETF 2.96% (I recently added to this)
International Growth Fund 2.86%
International Index Fund 2.50%
S&P Small Cap 600 ETF 2.34%

Top 10 Holdings 46.51%

My individual stocks are about 14% of my retirement portfolio. I hold 16 individual stocks there.

So now, I am mid-cap/small-cap titled but the small/value tilt is temporarily gone.

abuss368 · Post by **abuss368** » Fri Jul 31, 2015 10:06 pm

Hi nedsaid,

I always enjoy your posts and perspective. What 16 individual stocks do you own?

You are staying the course with the TIPS fund at only 3%+ of the portfolio? Does that make any meaningful impact?

How are the international bonds working for the portfolio? Hedged or Unhedged?

Best.

abuss368 · Post by **abuss368** » Fri Jul 31, 2015 10:07 pm

Did you remove international bonds?

nedsaid · Post by **nedsaid** » Fri Jul 31, 2015 10:25 pm

No, I have kept my International Bonds. I have two such funds, one of which is doing terrible. I recently added a little bit to the fund that has been doing terrible. This shows what a strong dollar can do to an unhedged foreign bond fund. I wanted a hedge against the falling US Dollar. The trouble is that the dollar is rising and not falling. Oh well. I have no plans to sell.

My original post describes the result of selling a stock and reinvesting the proceeds. The stock got to be about 3% of my portfolio, so when I sold it, the effect was to untilt my small/value tilt. That is why I added to the Vanguard Small Value Index ETF. The purchase moved that ETF into my top 10 investments.

The other thing I did was take the opportunity to rebalance. In essence, I took my one-day profit and turned it into bonds. My stake in the company that I had before the 50% rise last Friday was reinvested in the stock market.

One of the two stocks that I bought was a similar story to the stock I just sold. It is an Insurance stock and is based in a Metro area near the Metro area where I live. It is also a small cap stock. I thought that it was worth a shot. Maybe lightning will strike twice.

nedsaid · Post by **nedsaid** » Fri Jul 31, 2015 10:34 pm

abuss368 wrote:Hi nedsaid,

I always enjoy your posts and perspective. What 16 individual stocks do you own?

You are staying the course with the TIPS fund at only 3%+ of the portfolio? Does that make any meaningful impact?

How are the international bonds working for the portfolio? Hedged or Unhedged?

Best.

Of course, the "Four Horsemen of Underperformance" that I often post about are in there. AIG, Pfizer, Microsoft, and GE. I own a couple of Timber REITs, Plum Creek and Weyerhauser. I also buy stocks that are either headquartered or have a strong presence in my geographic area. This helps to follow the companies and keeps me interested. I have familiar large cap blue chip stocks in there. I will PM you with the list. I always own 2-3 small-cap stocks in the group and this has helped.

I also have the Vanguard TIPS fund in a workplace savings plan. Since TIPS have gotten expensive, I have not loaded up on them. I am staying the course.

The International Bond funds are unhedged. One is doing not so well but pretty good compared to other funds in its space. The other one is doing terrible right now.

itstoomuch · Post by **itstoomuch** » Fri Jul 31, 2015 10:57 pm

You pm me too.

I live in your geographic location. One of my holdings dropped 25% and then another rises 15%

nedsaid · Post by **nedsaid** » Wed Sep 23, 2015 9:43 pm

nedsaid wrote:
One of the two stocks that I bought was a similar story to the stock I just sold. It is an Insurance stock and is based in a Metro area near the Metro area where I live. It is also a small cap stock. I thought that it was worth a shot. Maybe lightning will strike twice.

I know that it is presumptuous to quote myself but I want to report that lightning did strike twice for me. Not long after I bought the insurance stock located in a Metro area 3 hours away by car, another Japanese firm made a bid for THAT company. The price was near the buy-out price so I sold out last week. Two life insurance firms in my geographic area being bought out by Japanese companies over the span of just a few weeks. This time I made hundreds and not thousands of dollars.

I took the proceeds and bought shares in a small life insurance company in Texas. So it is located outside of my geographic area but it has the value and dividend characteristics that I like and it was recommended by my broker.

I have owned some small to mid-cap stocks in my individual stock portfolio and have experienced several times getting a buy-out offer for those stocks. That is perhaps one reason for the small stock premium over large stocks. Smaller market cap stocks have a higher likelihood of being purchased than larger cap stocks. Any academic research on this?

small_index · Post by **small_index** » Wed Sep 23, 2015 11:38 pm

nedsaid wrote:I took the proceeds and bought shares in a small life insurance company in Texas.

Running that through Google Translate:
私が進行を取り、テキサス州の小さな生命保険会社の株式を購入しました。

Now you just need to reveal the name of the company, so another Japanese firm can buy that.

abuss368 · Post by **abuss368** » Thu Sep 24, 2015 12:03 am

small_index wrote:
nedsaid wrote:I took the proceeds and bought shares in a small life insurance company in Texas.
Running that through Google Translate:
私が進行を取り、テキサス州の小さな生命保険会社の株式を購入しました。

Now you just need to reveal the name of the company, so another Japanese firm can buy that.

Is that a ticker symbol?

itstoomuch · Post by **itstoomuch** » Thu Sep 24, 2015 12:33 am

Congradulations. I'm not following the progression.
So , ytd, are up or down, pleased with holdings?

riptide · Post by **riptide** » Thu Sep 24, 2015 12:31 pm

Ned,
Thanks for all the help with my investment portfolio!

My portfolio x ray looks very similar to yours:

Asset Allocation | Holdings Detail

Long% Short% Net%
Cash 2 0 2
U.S. Stocks 53 0 53
Foreign Stocks 13 0 13
Bonds 31 0 31
Other 0 0 0
Not Classified 0 0 0
Total 100 0 100

Show Short Position

Stock Style Diversification | Holdings Detail
Value Core Growth
Lg 19 23 21
Med 9 8 6
Sm 6 6 3

Sorry , I couldn't get it to paste like the page.

garlandwhizzer · Post by **garlandwhizzer** » Thu Sep 24, 2015 1:28 pm

I think you have a well thought out and well diversified portfolio, nedsaid. Your long years of experience in investing shows. You cover all bases. If and when inflation heats up, you may want to consider increasing SCV exposure, but with low to non-existent inflation and persistently sluggish economic growth at present I agree that a heavy tilt to SCV now is like beating a dead horse.

Garland Whizzer

itstoomuch · Post by **itstoomuch** » Thu Sep 24, 2015 6:57 pm

I take that you believe LI companies will merge. Probably a good call. Ma Boyle for me, we're big users. I like to own what i use. I don't need LI.

nedsaid · Post by **nedsaid** » Thu Sep 24, 2015 8:42 pm

itstoomuch wrote:Congradulations. I'm not following the progression.
So , ytd, are up or down, pleased with holdings?

Year to date of course my portfolio is down as the stock market is down and in correction territory.

I worked for a bank headquartered in my home state and the bank was taken over by a Minneapolis bank. This happened in the late 1990's. I lost my job but kept my stock which I still own. I saw what a killing the bank execs made when the bank was purchased and I wanted a piece of that action.

When the locally headquartered life insurance company de-mutualized soon after and became a publically held company, I figured that the insurance company would be taken out someday. So I bought 100 shares of the stock. It took 16 years but I was proven correct, the company was taken out by a Japanese company and I cashed out at probably nine times my original investment.

The broker found another insurance company headquartered in a city 3 hours away by car. So I bought 100 shares of that thinking eventually the same thing would happen again. I thought it would be years and not weeks. My thinking was I wanted to own a similar company and it didn't hurt that it was in my geographic area.

The first insurance company that was bought out was a case of buying a good company at a good price. It took patience to wait for the story to play out.

The second company being bought out so quickly was sheer luck. Evidently, Japanese insurance firms want a presence in the United States and are looking to buy into our market. I didn't know that. I figured my company would be bought out by another US company.

nedsaid · Post by **nedsaid** » Thu Sep 24, 2015 8:49 pm

garlandwhizzer wrote:I think you have a well thought out and well diversified portfolio, nedsaid. Your long years of experience in investing shows. You cover all bases. If and when inflation heats up, you may want to consider increasing SCV exposure, but with low to non-existent inflation and persistently sluggish economic growth at present I agree that a heavy tilt to SCV now is like beating a dead horse.

Garland Whizzer

Garland, I try. Like I have said many times, I will know when I retire whether I have done it right or not.

Raymond · Post by **Raymond** » Thu Sep 24, 2015 9:30 pm

abuss368 wrote:
small_index wrote:
nedsaid wrote:I took the proceeds and bought shares in a small life insurance company in Texas.
Running that through Google Translate:
私が進行を取り、テキサス州の小さな生命保険会社の株式を購入しました。

Now you just need to reveal the name of the company, so another Japanese firm can buy that.
Is that a ticker symbol?

I believe the Japanese characters are the Google translation of "I took the proceeds and bought shares in a small life insurance company in Texas."

Although taking the Japanese characters above and putting *them* through Google Translate produced:

"I took the progression, I purchased the stock of small life insurance company in Texas."

Best wishes to nedsaid on this mystery small life insurance company in Texas

nedsaid · Post by **nedsaid** » Fri Sep 25, 2015 9:19 pm

Raymond wrote:
Best wishes to nedsaid on this mystery small life insurance company in Texas

Yes, we will find out if Japanese Insurance executives can find Texas on a map!!

nedsaid · Post by **nedsaid** » Sat Oct 24, 2015 7:43 pm

Here is an update on my portfolio. Things changed a bit with a final contribution from a former employer into a target date fund which crept into the top 10.

1. US Total Stock Market Index 13.3%
2. Diversified Bond Fund 6.12%
3. Cash Balance Retirement Pension 5.07% (Frozen after 2009).
4. Vanguard US Total Bond Market Index 4.69% In Fund and in ETF form.
5. GNMA Fund 3.66%
6. TIPS Fund 3.16%
7. Vanguard Small Value Index ETF 2.87% (I recently added to this)
8. Fidelity Freedom 2025 Fund Class K 2.80% (In lieu of Cash Balance Pension contributions)
9. International Growth Fund 2.74%
10. International Index Fund 2.40%

Top 10 Holdings 46.81%

11. S&P Small Cap 600 ETF 2.28%
12. Foreign Value Fund 2.14%
13. Value Fund 2.07%
14. Mid-Cap Growth Fund 2.04%
15. World Allocation Fund 1.89%

Top 15 Holdings 57.23%

Individual Stocks 12.49% 16 stocks.

Stock Stylebox
22 22 18
06 07 10
06 06 04

US Stocks 50%
Foreign Stocks 17%
Bonds 29%
Cash 3%
Other 1%.

ofcmetz · Post by **ofcmetz** » Mon Oct 26, 2015 12:59 am

You got a more complicated Doo than I prefer, but it looks good on you.

I don't like having positions of only a few percent here and there like that, but you seem to have a good idea of how all of your pieces fit together.

nedsaid · Post by **nedsaid** » Sat Oct 31, 2015 9:23 am

ofcmetz wrote:You got a more complicated Doo than I prefer, but it looks good on you.

I don't like having positions of only a few percent here and there like that, but you seem to have a good idea of how all of your pieces fit together.

At some point, I probably will simplify. I have two work savings plans that I let ride because I can access the money penalty free as I am over 55 years old. Until I turn 59 1/2, I will most likely not consolidate those accounts.

My portfolio looks more complicated that it really is. My workplace savings plans, my small annuity, my mutual fund IRA, my ROTH IRA are all invested in similar fashion. The outlier is the Brokerage IRA which houses the individual stocks and the ETFs. I am over time adding more bonds to the Brokerage IRA so that it is more in alignment with the other accounts. The Brokerage IRA once was almost 100% stocks but I have worked that down to about 87%. I also have kept my cash balance pension as it has a nice guaranteed return in a very low interest rate environment.

But you are correct, I take into account how the parts fit into the big picture. I am not just throwing darts at a page. That is why I like the Morningstar Portfolio X-Ray so much, one can look at the portfolio as a whole and you can see what you actually own pretty clearly.

nedsaid · Post by **nedsaid** » Wed Nov 11, 2015 3:54 pm

Lightning for me has struck three times! Plum Creek Timber will be acquired by Weyerhauser in a stock swap. Plum Creek is a stock that I have owned since 1988, so I have owned it for 27 years. I also am a shareholder of Weyerhauser which I purchased when it bought out my stock in Willamette Industries. The Plum Creek stock went up $7 a share on the announcement.

So I have had three of my stocks taken out in a matter of four months! Two life insurance companies and a timber company.

Keep in mind my holding periods. The insurance company I owned 16 years and Plum Creek 27 years. It took a lot of patience but it all paid off. The other insurance company that was taken out I owned less than two months.

I will take the stock but am unsure what I will do afterwards. I do like the idea of owning a lot of trees in my portfolio. I may trim my holdings in Weyerhauser and use the proceeds to buy another stock.

Also Microsoft, which I bought in 2006 is now about double what I paid for it. I will have to find its replacement in my "Four Horsemen of Underperformance." Comtech Telecommunications is a good candidate. So I may as well announce a replacement stock in my underperformance index of four stocks.

What I am trying to illustrate is the importance of patience in investing. It is just that I am too lazy to sell. It isn't due to brilliance. Broker #2 recommended Plum Creek to me so many years ago.

abuss368 · Post by **abuss368** » Wed Nov 11, 2015 4:37 pm

Patience is key!

I like your portfolio. You continue to invest in U.S. and International Bonds correct? I just don't care for the TIPS! At 3% of a portfolio it probably does not make a difference one way or another. The equities look good. Are you going to continue to select a few individual stocks for fun and a little additional risks?

Best.

nedsaid · Post by **nedsaid** » Wed Nov 11, 2015 4:55 pm

abuss368 wrote:Patience is key!

I like your portfolio. You continue to invest in U.S. and International Bonds correct? I just don't care for the TIPS! At 3% of a portfolio it probably does not make a difference one way or another. The equities look good. Are you going to continue to select a few individual stocks for fun and a little additional risks?

Best.

Yes, the International Bonds are still there.

The individual stocks are fun. I will keep what I have in the individual stocks but I am still putting my new money into indexes. I have been pretty surprised by my recent success with the buyouts. I will continue my course of de-emphasizing the individual stocks as I have been doing since 2000.

triceratop · Post by **triceratop** » Wed Nov 11, 2015 9:47 pm

Thank you for the update, nedsaid. I greatly enjoy reading all of your posts. A very good return on investment from some of these individual holdings.

As an aside, I sincerely hope your use of the phrase "trim my [timber] holdings" was intentional, so near it was to the point about owning lots of trees. It certainly had me snickering.

nedsaid · Post by **nedsaid** » Wed Nov 11, 2015 10:30 pm

triceratop wrote:Thank you for the update, nedsaid. I greatly enjoy reading all of your posts. A very good return on investment from some of these individual holdings.

As an aside, I sincerely hope your use of the phrase "trim my [timber] holdings" was intentional, so near it was to the point about owning lots of trees. It certainly had me snickering.

I made out on this because I purchased in the late 1980's and people weren't thinking much of Timber as an investment. The Spotted Owl was getting to be a big thing and Timber harvests on Federal lands were being limited pretty severely, by about 90%. This made private timberland very valuable. My broker pounded the table with a buy recommendation and he said I would own it until I retired. Unless you lived in my geographic area, you probably would not have understood the spotted owl story and how it affected the Timber industry. A lot of people also didn't understand the consolidation within this industry. Within a few years, Wall Street caught on. The price zoomed and the stock split. And those nice dividends too.

It is an example of how local knowledge can pay off for an investor. Now wealthy individuals and university endowments own Timber land directly. The cat is out of the bag. Plum Creek has been owned by lots of people in my geographic area.

Over the years, I made a lot of money in this sector as the industry consolidated. I owned stuff like Willamette Industries, Great Northern Nekoosa, James River, and St. Joe. Later on, I took the proceeds from the buyout of Willamette Industries to buy Weyerhauser.

The idea of owning something that literally grew while I slept at night and worked during the day was very attractive to me. If times get a bit tough and they cut back on Timber harvests, those trees just keep growing. Now, I expect you will get about a market return on the forest product sector now that the story is so well known and understood. It does pay to be early to the party.

nedsaid · Post by **nedsaid** » Wed Nov 25, 2015 9:47 pm

Wow. Lightning has struck again. Pfizer, which is one of my "Four Horseman of Underperformance" is merging with Allergan. This is four companies in my portfolio that have been taken over since August. Two insurance companies, Plum Creek, and now Pfizer. I had no idea all this was going to happen.

SGM · Post by **SGM** » Thu Nov 26, 2015 4:44 am

Pfizer is one of my long time holdings. I usually sell just prior to or after a merger/takeover as I don't want another holding that I have difficulty figuring out the basis 30 years later. I am continuing the process to simplify and increase my holdings in index funds and increase my bond allocation as I have been doing over the last 5 years.

I am loathe to sell these individual stocks with large LT cap gains. What will you do with Pfizer? Our largest realized capital gain this year was the partial sale of a supermarket stock that was bought individually and was added to by a takeover of another supermarket stock we bought recently. The stocks were depressed and DW liked shopping there and people had to eat during the recession. That was the total sum of my analysis. You could say I use heuristics or "satisficing". Mostly I have been adding to index funds, but I cannot pass up a screaming bargain occasionally.

Just as I am done doing my Roth conversions, a new pension will start paying out and a spousal benefit will begin. I will have to look more closely at my tax situation this year to see if I will sell any more individual stock this year or next. Then there is the bequest motive and letting the next generation inherit those individual stocks with large capital gains at a new basis.

There is a lot to think about.

nedsaid · Post by **nedsaid** » Thu Nov 26, 2015 10:13 am

I own Pfizer in a brokerage IRA account so I don't have to worry about tax basis or capital gains. I don't have very much capital gains in any case, I suppose most of my return has been from dividends. As with Plum Creek/Weyerhauser, I will just let the merger happen and hang on to my shares.

nedsaid · Post by **nedsaid** » Fri Feb 26, 2016 8:57 pm

It finally happened, the Weyerhauser/Plum Creek merger. I have owned Plum Creek stock since 1988, holding it over 27 years. Broker #2, the fellow who talked me into buying the original Plum Creek shares said that I would hold the stock until I retired. Well, I am 56 years old now and he missed by a few years but 27 years, the 3-1 stock split, the dividends, and the rise in price made it a terrific investment.

I also owned Weyerhauser shares before the merger, so now I have a pretty good number of shares in the combined company. I will hold on to what I have for now, though at some point I may take another rebalancing opportunity. Broker #4, my independent broker, says that WY stock is relatively cheap now and that I should hold. By the way, this is not an investment recommendation.

But it is sad. Life moves on. Plum Creek had been an important part of my investing life and probably the best investment that I ever made. It is a bit like watching an old friend go.

I will have to update my top holdings list at some point as WY has broken into the top 10.

nedsaid · Post by **nedsaid** » Sat Mar 12, 2016 11:44 pm

I have updated my portfolio. Not too much change. With the merger of Weyerhauser and
Plum Creek, the combined holdings in Weyerhauser bring it to my number seven position in
my top 10 holdings.

Seeing that I comment on a lot on others' investment portfolios, it is only fair that I make disclosures about my own investments.

1. US Total Stock Market Index 13.16%
2. Diversified Bond Fund 6.23%
3. Cash Balance Retirement Pension 5.19% (Frozen after 2009).
4. Vanguard US Total Bond Market Index 4.99% In Fund and in ETF form.
5. GNMA Fund 3.74%
6. TIPS Fund 3.33%
7. Weyerhauser 2.83%
8. Vanguard Small Value Index ETF 2.81% (I recently added to this)
9. Fidelity Freedom 2025 Fund Class K 2.76% (In lieu of Cash Balance Pension contributions)
10. International Growth Fund 2.58%

Top 10 Holdings 47.62%
11. International Index Fund 2.27%
12. S&P Small Cap 600 ETF 2.24%
13. Value Fund 2.08%
14. Foreign Value Fund 2.01%
15. Mid-Cap Growth Fund 1.93%

Top 15 Holdings 58.15%

Individual Stocks 12.52% 15 stocks.

Stock Stylebox
21 21 19
09 06 07
06 06 05

US Stocks 50%
Foreign Stocks 17%
Bonds 30%
Cash 3%

67% Stocks, 33% Bonds and Cash.

Average mutual fund expense ratio: 0.51%

garlandwhizzer · Post by **garlandwhizzer** » Sun Mar 13, 2016 2:27 pm

Stock picking doesn't work for most of us, but it sounds like nedsaid has had some very good long term experiences with Plum Creek for example. Nedsaid has a lot of experience in investing, does his research, and has a non-emotional approach which helps a lot. He is not afraid to make well-reasoned bets on individual stocks with a portion of his portfolio. While this is not a policy that can recommended to all, his success speaks for itself. All rules have exceptions and he provides an exception to the rule of not picking individual stocks.

Many years ago in the early 1990s, I knew people in Silicon Valley with keen insight who encouraged me to invest in a few relatively unknown, rapidly growing tech stocks that were massively undervalued at the time relative to their growth prospects, CSCO, INTC, and ORCL. They were not household names then. Without taking that step, making a considerable bet on these names, there is no way that I could have retired at age 50 which I did in 1997. If you have special insight which nedsaid had with Plum Creek and I lucked into with tech stocks, buying individual stocks can work. The problem is that special insight is rare and it is very easy to mistake an exuberant bull market (tech boom of the 1990s) for investing genius which is even more rare. I found this out in the early 2000s and eventually decided my stock picking days were behind me. Since then I have gradually moved more and more toward the index wisdom of Jack Bogle which not only works but requires no special skill except patience and a steady hand.

Garland Whizzer

nedsaid · Post by **nedsaid** » Sun Mar 13, 2016 3:28 pm

Garland, if there were any secrets to whatever success I have had, they would be getting in early and being very patient. Let me be very clear that I have had my clunkers too. Indeed, I have posted a lot about the four horsemen of underperformance: GE, Microsoft, Pfizer, and AIG. I had disasters with Lucent, Nortel, and AIG. I haven't built critical mass yet and plan to be working for a while more.

You had some early knowledge of the tech industry because of where you lived and your connections. I knew all about the spotted owl and the effect on timber harvests on Federal Lands, I learned from my brokers that this would cause private timber lands to become more valuable. Living where I live, I got the memo a bit earlier than the rest of the country. I had success with other forest product stocks, I give credit to Broker #2.

Also with the Insurance Company that I sold in August, I bought shares soon after the company went public. I had just been laid off from a local regional bank because we had been acquired by another bank. I figured that the Insurance Company would eventually be purchased too and I wanted a piece of that action. It took about 17 years for that story to play out but I had to be patient to get the nine-fold or so return.

There really aren't any secrets. Just buying good stuff and keeping it.

Note that I have largely "retired" from stock picking, I work with my broker to essentially replace whatever stocks I sold since 2000. I have made a conscious effort to diversify away from individual stocks. I am indexing more and more as I get older.

White Coat Investor · Post by **White Coat Investor** » Sun Mar 13, 2016 4:16 pm

I thought this thread was about snowmobiles.

nedsaid · Post by **nedsaid** » Sun Mar 13, 2016 8:36 pm

White Coat Investor wrote:I thought this thread was about snowmobiles.

LOL! Sorry, the idea was that I had made a few changes in my portfolio. Sort of like getting a new hairstyle and asking people what they think.

It is also a way of providing accountability. I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.

I am also hoping that others can learn from my mistakes and not have to repeat them. One big lesson is that stock picking to attempt to beat the market is difficult and time consuming. All I can say is that stock picking hasn't hurt me but I doubt that I have beaten the averages.

Another lesson is to limit your trading, the less the better. Buy good stuff and keep it. The biggest drag on returns is incorrect sell/buy decisions. Most often, the investment that is sold outperforms what is bought to replace it! A Larry Swedroe article cited research that showed that trading hurt the investment returns of Investment Clubs. As I recall, the drag from incorrect sell/buy decisions was about 4% a year.

It is a thread to track my own portfolio. At some point, I want to go back through my records and post my actual investment results.

Norcalkenny · Post by **Norcalkenny** » Mon Mar 14, 2016 9:26 am

Excellent Ned.
+1

Gort · Post by **Gort** » Tue Mar 15, 2016 3:18 pm

White Coat Investor wrote:I thought this thread was about snowmobiles.

nedsaid · Post by **nedsaid** » Sat Apr 02, 2016 9:20 pm

Just checking the Year to Date performance of my investments. I want to illustrate a point that investors should not give up on asset classes that exhibited poor recent performance. As a wise investor once said, "If all your investments are doing well, you are probably not diversified enough."

US Total Stock Market is up 1.52%.
US Total Bond Market is up 3.21%.
International Index is down -4.04% (this index does not have Emerging Markets)
Vanguard Total International -1.12 (this contains Emerging Markets)
Vanguard TIPS is up 4.58%.
GNMA Fund is up 1.63%.

My International Bond Fund that was so awful in recent years is up 8.12%. Templeton Global Bond, which I own in a workplace savings plan is up only .01%. Good to see my patience with the International Bond Fund is paying off, good to see after some awful performance.

Hmm. Emerging Markets are perking up. An active fund that I own in a workplace savings plan is up 5.51%. Another Emerging Markets fund I own in a mutual fund IRA is up 3.56%. The awful Templeton Developing Markets Fund is even up 5.81%. Emerging Markets are up while Developed Markets are down year to date.

US Value might be perking up. Vanguard Small-Cap Value Index ETF is up 3.67%. My boring old Value fund in the mutual fund IRA is up 2.59%. A Foreign Value fund that I own is down -1.41%, which is better than the broad International Developed Markets Index. Maybe the worm has turned from growth to value. Hmmm. Time will tell.

So far, a good year for quality US Bonds. US Stocks are up but International Stocks are down except for Emerging Markets. TIPS are perking up. Value is looking pretty good right now but too early to tell if the growth phase in the markets have ended.

nedsaid · Post by **nedsaid** » Sat Jul 02, 2016 3:24 pm

Here is the latest update on my portfolio. The main change was the selling of some Weyerhauser stock and purchasing the US Total Bond Market ETF with the proceeds. Stocks have been worked down to probably 66%.

1. US Total Stock Market Index 13.17%
2. Diversified Bond Fund 6.32%
3. Vanguard US Total Bond Market Index 5.94% In Fund and in ETF form.
4. Cash Balance Retirement Pension 4.97% (Frozen after 2009).
5. GNMA Fund 3.63%
6. TIPS Fund 3.57%
7. Vanguard Small Value Index ETF 2.84%
8. Fidelity Freedom 2025 Fund Class K 2.74% (In lieu of Cash Balance Pension contributions)
9. International Growth Fund 2.46%
10. S&P Small Cap 600 ETF 2.26%

Top 10 Holdings 47.9%
11. International Index Fund 2.25%
12. Weyerhauser 2.03
13. Value Fund 1.95%
14. Foreign Value Fund 1.95%
15. Mid-Cap Growth Fund 1.93%

Top 15 Holdings 58.01%

Individual Stocks 11.85% 15 stocks.

Stock Stylebox
24 21 21
05 06 07
06 05 04

US Stocks 49%
Foreign Stocks 16%
Bonds 31%
Cash 3%
Other 1%

65% Stocks, 34% Bonds and Cash, 1% Other.

Average mutual fund expense ratio: 0.50%

itstoomuch · Post by **itstoomuch** » Sat Jul 02, 2016 9:07 pm

No idea.
So are you ahead YTD?
nothing else matters.

nedsaid · Post by **nedsaid** » Sun Jul 03, 2016 12:13 am

itstoomuch wrote:No idea.
So are you ahead YTD?
nothing else matters.

According to Quicken, these are my returns:

One year: 1.65%
Three years: 6.40%
Five years: 6.33%

65-69% stocks/35%-31% bonds and cash
International stocks 24-27% of stocks
(Disclaimer: not sure Quicken calculates correctly,
my returns might actually be a tad higher).

Vanguard Target Date 2025 from Morningstar

One year: 0.82%
Three years: 6.95%
Five years: 6.81%

Moderate Target Risk from Morningstar

One year: 1.72%
Three years: 5.57%
Five years: 5.72%

So it looks like I am in the ballpark.

nedsaid · Post by **nedsaid** » Sat Apr 22, 2017 12:22 pm

I thought I would update my retirement portfolio as of today: April 22, 2017.

1. US Total Stock Market Index 12.89%
2. Diversified Bond Fund 6.14%
3. Vanguard US Total Bond Market Index 5.38% In Fund and in ETF form.
4. Cash Balance Retirement Pension 4.61% (Frozen after 2009).
5. TIPS Fund 3.47%
6. GNMA Fund 3.12%
7. Vanguard Small Value Index ETF 3.01%
8. Fidelity Freedom 2025 Fund Class K 2.76% (In lieu of Cash Balance Pension contributions)
9. International Growth Fund 2.54%
10. S&P Small Cap 600 ETF 2.45%

Top 10 Holdings 46.37%
11. International Index Fund 2.37%
12. Weyerhauser 2.14%
13. Foreign Value Fund 2.09%
14. Value Fund 1.81%
15. World Allocation Fund 1.79%

Top 15 Holdings 56.57%

Individual Stocks 12.83% 17 stocks.

Top 10 Individual Stocks
1. Weyerhauser
2. Walt Disney Company
3. Exxon/Mobil Corporation
4. Johnson & Johnson
5. Applied Materials Inc.
6. Boeing Company
7. JP Morgan & Chase Co.
8. Microsoft Corporation
9. US Bancorp
10. Pfizer

Stock Stylebox
26 20 20
05 06 07
06 06 05

US Stocks 50%
Foreign Stocks 17%
Bonds 30%
Cash 3%
Other 1%

67% Stocks, 33% Bonds and Cash, 1% Other.

Average mutual fund expense ratio: 0.47%

Performance results from Quicken
One Year 10.65%
Three Year 5.61%
Five Year 8.15%

nedsaid · Post by **nedsaid** » Sun Apr 23, 2017 9:22 pm

A couple of things changed in my portfolio that I wanted to comment on.

First of all, I started to get a bit excited about individual stocks again. Sort of returning to my roots as an investor. My first stock was AST Research, purchased in 1988. I made a profit on the stock and it was off to the races! For many years, I have kept at least 15 individual stocks in my retirement portfolio. It does cause a bit of back strain hauling those annual reports to the recycle bin!

One thing I kept noticing was that the dividend yield of many of my stocks was higher than the yield in the Vanguard Total Bond Market ETF. My stocks have a good shot of creating an income stream from dividends that grows faster than inflation. As I near retirement, an inflation-adjusted income stream has great appeal.

I had some accumulated cash and bought shares of Gilead Sciences with it. It looks like a very good value, I was getting a growth stock with a P/E of 6-8 and a lot of cash on the balance sheet. I figured it was worth taking a shot at. Hopefully it won't be a value trap.

My position in Applied Materials was doing so well that I decided to sell off 1/3 of my stake. I took the proceeds and put part into Gilead Sciences and the other part into Coke, a stock I had wanted to own for many years. The valuation of Coke and other consumer stocks were relatively high, I held my nose and bought Coke anyway. Like Peter Lynch, I had lust in my heart and lust in my heart for individual stocks.

More cash came available recently and I made a third investment in Gilead. It looks compelling but I know I am taking a chance. I think I will stop there. Not a huge position, it isn't even in my Top 10 individual stocks but I thought it was worth a shot.

I am up to 17 individual stocks in my retirement and my percentage invested in these individual securities went up a bit. It isn't that I am going to sell my index funds and buy more stocks. It is just that I am getting a bit more interested in the individual stocks again. This is a pretty minor shift.

Another reason is that my position in Genworth will be taken out during the next quarter. A Chinese Insurance Company is buying them. I bought Gilead and Coke to increase the number of holdings as it seems that individual companies just keep getting taken out. And yes, I made a profit in Genworth.

Were Larry Swedroe still on the forum, he would be having a cow reading this. Not only have I been buying individual stocks but enjoying the dividends. I feel like the penitent in the confession booth confessing my investing sins. Don't worry, if you read further, I bought some index funds as penance.

Secondly, my former workplace further consolidated its available investments and I got sold out of a TIPS fund, a Real Estate Fund, and an Emerging Markets Fund. Fortunately, there is a brokerage option and I elected to purchase similar index funds in their place. This further drove down my expense ratios. My former workplace savings plan expense ratios went down from 0.32% down to 0.22%. My combined retirement account expense ratios went down from 0.50% to about 0.47%. To further free up cash, I sold a bit of my US Total Market Index and my favorite GNMA Fund. I increased my commitment to TIPS and Emerging Markets and kept the Real Estate about the same.

This is not investment advice. For heaven's sake, don't go out and make these purchases just because I did. These are not investment recommendations. All I am doing is telling the forum what I am doing with my own money, which is only fair as I give advice to individuals here. The intent is to be open and not to run a stock picker's news letter on the forum. I have never claimed that my individual stocks have over time outperformed the market. My guess is that I have achieved about market returns.

The actionable advice here is to rebalance from US to International, particularly Emerging Markets. Overseas, stocks are cheaper than here in the United States. The Real Estate Fund and Emerging Markets funds that were sold out from under me where active funds and I replaced them with similar index funds. I actually increased my commitment to the passive index funds. This is actionable as well.

nedsaid · Post by **nedsaid** » Sun Apr 23, 2017 10:48 pm

Okay, let's compare how my portfolio did compared to a Vanguard 3 fund portfolio.

I will use 50% Vanguard Total Stock Market, 33% Vanguard Total Bond Market, and 17% Vanguard Total International Stock Market. I used Portfolio Visualizer.

For 10 years, Vanguard had a CAGR of 5.95%. Nedsaid had 5.34%. (edit: 5.02% - see below)
For 5 years, Vanguard had a CAGR (compounded annual growth rate) of 8.18%. Nedsaid had 8.15%.
For 3 years, Vanguard had a CAGR of 5.82%. Nedsaid had 5.61%.
For 1 year, Vanguard had a CAGR of 4.01%. Nedsaid had 10.65%.

These are not exact comparisons. Vanguard held steady at 67% stocks, Nedsaid's stocks fluctuated between between 60% and 72% stocks but was at about 2/3 stocks most of the time. Nedsaid rebalanced very casually where the Vanguard in the portfolio visualizer illustration kept a steady allocation. Fluctuation was caused by the 2007-2008 run-up and the aftermath of the 2008-2009 financial crisis and bear market.

For example, when stocks took a dive in 2008-2009, Nedsaid did not rebalance from bonds to stocks, he just put 100% of new monies for investment into the stock market for about a year. I was too scared to sell bonds to buy stocks. If I had rebalanced, this would have boosted returns. I started a mild rebalancing program in July 2013 that continues to this day. The mild rebalancing brought my stocks down from 69% to 67% during that time period. During the mild rebalancing, my stock allocation got as low as 66%.

Let's look at Vanguard LifeStrategy Moderate Growth During the same time period:

10 years Vanguard 67/33 5.95% Vanguard Moderate Growth 4.67% Nedsaid 5.34% (probably 5.02%)
5 years Vanguard 67/33 8.18% Vanguard Moderate Growth 7.52% Nedsaid 8.15%
3 years Vanguard 67/33 5.82% Vanguard Moderate Growth 5.34% Nedsaid 5.61%
1 year Vanguard 67/33 4.01% Vanguard Moderate Growth 8.40% Nedsaid 10.65%

Nedsaid's returns are calculated by Quicken. I posted in a thread showing my prior year's returns after 2014 or 2015, and my manual back of the envelope calculation showed about a 1/2% return greater than Quickens. My guess is that Quicken somewhat under calculates my returns by a fraction of a percent. Maybe a quarter of a percent a year. (Edit: 1,3,5 years are solid, I found an error in pension contributions that weren't counted so 10 year return s/b more like 5.02%).

So these numbers are not exact but to give others an idea of the returns that I have actually been getting. Not rebalancing in 2009 probably depressed my 10 year returns a bit. Again, I want to be honest and open about what I have actually achieved as an investor.

So I have done okay but I am not the next Warren Buffett or Peter Lynch.

nedsaid · Post by **nedsaid** » Fri Apr 28, 2017 12:05 pm

This is an edited answer to someone's question about small-cap individual stocks.

I am a believer in small-cap investing. In my Brokerage IRA where I hold the individual stocks, I own both an S&P 600 Small-Cap Index ETF and the Vanguard Small Value Index ETF. I also own a Micro-Cap Index ETF. Though my individual stocks are mostly the Large Cap Blue Chips, I have usually owned one or two In the Small Cap space. Right now I own Comtech Communications which I should have probably sold when there was a lot of speculation about it being taken out in a merger, instead it took out and merged with another smaller company and that had a bad effect on the stock price. I also own Genworth, which I bought for a bit over $1 a share during the financial crisis. I sold 1/3 of my original investment and made a good profit and now I am playing with the house's money so to speak. It is over $4 a share and will be taken out at just over $5 a share. Will make a profit on that too, but this was a case of where I should have sold earlier. As you can tell, I don't like to sell.

Genworth was a success, Comtech a failure so far. In the past, I had three individual small-cap stocks taken out in buy-outs, all three with good profits. Plum Creek was an all-time big winner in the mid-cap space and I also held Weyerhauser. The two companies merged and I trimmed my position. The merged company is proving to continue to be a good investment.

Probably the most efficient way to invest in this space are the ETFs. I have been very pleased with the Vanguard Small-Cap Value Index and the S&P 600 Small-Cap Index ETF. The Micro-Cap Index ETF has been mildly disappointing but its performance has been acceptable, Morningstar says that a plain vanilla Small-Cap Index is a better bet than the Micro-Cap Index (now they tell me). The biggest issue with the Micro-Cap Index is the front running by traders. If I had access to the DFA Micro-Cap Fund, I would buy that as they don't follow an index, have a very patient trading strategy and thus don't have a front-running problem.

A Micro-Cap fund would be a fertile area for active management. My broker suggested a Royce Micro-Cap Fund and I bought the Micro-Cap Index instead and he was right and I was wrong. Front running of the Index Funds is a very minor problem for the larger indexes and Vanguard has adapted with patient trading strategies. At one time, Gus Sauter estimated this cost shareholders 0.25% a year, though Vanguard overcame that problem. Vanguard Indexes have sometimes actually slightly beat their benchmark, I recall. It is an irony that to run an index fund well, you have to be good at trading.

Research Royce Micro-Cap and Bridgeway has a fund in that space as well. Do some research. A good Micro-Cap Fund will be a more efficient way to invest in the small-cap space than individual small-cap stocks. Problem is that such funds are hard to find and they are sometimes closed to new investors.

My performance records are from Quicken but I have been suspicious that my results were actually a bit higher. I posted in a thread about my 2014 (maybe 2015) performance and my results from Quicken just seemed low. So I calculated my return as if I made all my contributions at the first of the year and calculated it again as if I made all my contributions at the end of the year. I split the difference and came up with 0.50% higher than Quicken.

Eyeballing and rough calculations of my returns suggest that I have about matched the indexes. Hard to tell exactly as I just don't want to do detailed analysis with spreadsheets. Close enough is close enough.

Snowjob · Post by **Snowjob** » Fri Apr 28, 2017 2:04 pm

nedsaid wrote: ...One thing I kept noticing was that the dividend yield of many of my stocks was higher than the yield in the Vanguard Total Bond Market ETF. My stocks have a good shot of creating an income stream from dividends that grows faster than inflation. As I near retirement, an inflation-adjusted income stream has great appeal...

I think that is the appeal to a lot of people who pursue dividend investing. Any thoughts on making a change or just a random musing?

nedsaid · Post by **nedsaid** » Fri Apr 28, 2017 2:21 pm

Snowjob wrote:
nedsaid wrote: ...One thing I kept noticing was that the dividend yield of many of my stocks was higher than the yield in the Vanguard Total Bond Market ETF. My stocks have a good shot of creating an income stream from dividends that grows faster than inflation. As I near retirement, an inflation-adjusted income stream has great appeal...
I think that is the appeal to a lot of people who pursue dividend investing. Any thoughts on making a change or just a random musing?

Stocks are stocks even if they pay dividends. People sometimes forget this. Even dividend paying stocks can be quite volatile. So I am not myself or suggesting to others that they replace their bonds with dividend stocks. I am keeping my bonds.

What I am doing is keeping a portion of my stocks in individual dividend paying stocks. My point is that my income stream from those dividends are likely to increase at a rate faster than inflation and that is attractive to me.

I will probably very modestly increase my commitment to individual stocks. I am not selling any of my index funds or active funds to buy these stocks.

nedsaid · Post by **nedsaid** » Sat May 06, 2017 12:43 pm

Well, I finally did it. I took worked with my tabbed spreadsheet that tracks my portfolio from year to year and I calculated my actual investment returns with Excel. I calculated my compound annual growth rate for 1, 3, 5, and 10 years with Excel for the year ending December 31, 2016.

In another thread, somebody had posted the returns of the Lazy Portfolios as monitored by Market Watch. I had Quicken calculate my 1, 3, 5, and 10 year performance versus the Lazy Portfolios as of May 4, 2017. I adjusted my 10 year performance to 5.06% when I found out that I had not accounted for pension contributions properly in Quicken.

It was gratifying that I realized that I hadn't done such a bad job managing my own portfolio. So below I benchmarked against the Lazy Portfolios and the Vanguard LifeStrategy Moderate Growth fund.

I also found that Quicken actually does a pretty good job. Here below is a repost from the "Ted Seides 'Why I lost My Bet With Warren Buffett' - Bloomberg" thread.

I couldn't help myself, I took the returns off of the Market Watch Lazy Performers as of 5/4/2017 and compared them to my own retirement portfolio as of the same day with 1, 3, 5, 10 CAGR.

Aronson Family Taxable
13.67% 1 year
5.49% 3 year
7.64% 5 year
4.97% 10 year

Fundadvice Ultimate Buy & Hold
9.68% 1 year
3.66% 3 year
5.98% 5 year
3.76% 10 year

Dr. Bernstein's Smart Money
11.04% 1 year
5.20% 3 year
7.55% 5 year
4.45% 10 year

Coffeehouse
9.74% 1 year
5.59% 3 year
7.77% 5 year
4.97% 10 year

Yale U's Unconventional
9.10% 1 year
5.89% 3 year
7.55% 5 year
4.94% 10 year

Dr. Bernstein's No Brainer
13.11% 1 year
5.06% 3 year
9.12% 5 year
4.85% 10 year

Margaritaville
11.93% 1 year
4.26% 3 year
6.69% 5 year
4.07% 10 year

Second Grader's Starter
15.97% 1 year
6.62% 3 year
10.09% 5 year
5.00% 10 year

Vanguard LifeStrategy Moderate Growth
10.67% 1 year
5.55% 3 year
7.69% 5 year
4.72% 10 year

Nedsaid (calculated by Quicken as of 5/4/2017)
12.97% 1 year
5.90% 3 year
8.52% 5 year
5.06% 10 year (This number was originally calculated as 5.38% CAGR by Quicken- I found a flaw in that I did not record Cash Balance Pension Fund Contributions properly. Quicken undercounted pension contributions.)

Nedsaid (calculated by Excel as of 12/31/2016)
8.63% 1 year
4.87% 3 year
8.88% 5 year
4.93% 10 year

These numbers as of 12/31/2016 are solid as I calculated this in Excel myself.

S&P 500
18.24%
10.59%
13.81%
7.03%

SeeMoe · Post by **SeeMoe** » Sun May 07, 2017 7:31 pm

I wish now that I'd of bought in to VISA when it went public a couple of years ago as I really like this company. It has done well since then too. Facebook is one that astonishes me, and I kind of wanted to buy in but still think it could go South quick as it has gone up! So I just stick to my Index funds and look at the individual stocks with rose colored glasses....

SeeMoe..

nedsaid · Post by **nedsaid** » Mon May 08, 2017 11:17 am

SeeMoe wrote:I wish now that I'd of bought in to VISA when it went public a couple of years ago as I really like this company. It has done well since then too. Facebook is one that astonishes me, and I kind of wanted to buy in but still think it could go South quick as it has gone up! So I just stick to my Index funds and look at the individual stocks with rose colored glasses....

SeeMoe..

There are a lot of coulda, woulda, shoulda when it comes to individual stocks. We wish we had foreknowledge but we really don't. For example, if I knew then what I knew now, I would have loaded up on Microsoft stock soon after Microsoft came public and would have kept investing through its early years. I would be long since retired.

Really, you have to buy quality and have long holding periods with individual stocks. Better to hit singles and doubles rather than aiming for the fences and whiffing at the plate. My brokers taught me to buy good companies with temporary problems and a depressed price. Every one in a while, a truly great company would get caught in a general bear market and you could buy one of these at an attractive price. A lot of this is just not to overpay when you buy stocks. But the way I have invested in individual stocks is likely to mostly track the broad market but will unlikely get the really big gains. It is a cautious and conservative approach.

The thing is, when you buy the US Total Stock Market Index, you are buying a mega-cap index as the top 100 stocks are just over 50% of the total market's market capitalization. Just do that and you are buying quality. There are many dumber things someone can do with their money than to buy 100 of the most successful companies in the United States.

Picking individual stocks is not an efficient way to invest. I would recommend the broad index funds or for factor investors, the lower cost factor funds like DFA. Indexing is a great strategy that is hard to beat.

nedsaid · Post by **nedsaid** » Mon Jun 05, 2017 11:25 am

Note: I have copied this post from another post I made in another thread. I post all my investment returns in the New 'Doo thread so it is all in one place. One can see how I have actually done.

Okay, you have my curiosity up. I do have Quicken so let me calculate the returns of my individual stocks in my retirement portfolio. In the Investment Report, I picked customized dates and I checked all the individual stocks in my retirement accounts since I started tracking things in Quicken starting in 1995. I used the Fidelity Total Market Index Fund Premium Class, which I own
personally.

Nedsaid's Individual Stocks

10 year 6.41%
5 year 18.78%
3 year 11.82%
1 year 23.57%

Total US Stock Market

10 year 7.12%
5 year 16.08%
3 year 10.08%
1 year 18.52%

My five, three, and one year performance is pretty good. I trail the US Total Stock Market Index
by 71 basis points over a 10 year period.

How about 15 years? Quicken calculates my 15 year returns at 7.59%. That share class of the Fidelity Total Market Index doesn't go back that far but the S&P 500 returned 7.85% over that time period.

So Quicken confirms my thinking, my individual stocks have almost matched the returns of the S&P 500 over 15 years.

So this is a real life example of what an individual has actually done. By the way, this does include dividends.